Exhibit 4.17


 


EXECUTION COPY


 


(Multicurrency – Cross Border)


 


ISDAÒ


 


International Swaps and Derivatives
Association, Inc.


 


SCHEDULE


to the


Master
Agreement


 


dated as of March 24, 2004


 


between


 


	
  Morgan
  Stanley Capital Services Inc., a  corporation organized under the laws of the State of
  Delaware



  (“Party A”)

  	
   

  	
  and

  	
   

  	
  Wilmington Trust Company, a Delaware banking corporation, in
  its capacity as Subordination Agent on behalf of the Trustee under the Pass
  Through Trust Agreement dated as of the date hereof between Wilmington Trust
  Company and JetBlue Airways Corporation with respect to the JetBlue Airways
  Pass Through Trust, Series 2004-1C-O (for purposes of this agreement only,
  the “Class C Trust Agreement”)



  (“Party
  B”)

  



 


Part 1


Termination
Provisions


 


(a)                                  Specified
Entity.  None.


 


(b)                                  Specified
Transaction.  Specified Transaction
will have the meaning specified in Section 14.


 


(c)                                  Events
of Default.  The “Events of Default”
set forth in Section 5(a) will not apply to Party B but will apply to Party A
(subject to clause (d) below).


 


(d)                                  Cross
Default.  The “Cross Default”
provision of Section 5(a)(vi) will not apply.


 


(e)                                  Termination
Events.  The “Illegality” provisions
of Section 5(b)(i), the “Tax Event” provisions of Section 5(b)(ii), the “Tax
Event Upon Merger” provisions of Section 5(b)(iii) and the “Credit Event Upon
Merger” provisions of Section 5(b)(iv) will apply to Party A but will not apply
to Party B. Party A shall be the sole Affected Party (under Section 5(b)(i),
(ii) and 5(b)(iv)) and the sole Burdened Party (under Section 5(b)(iii)) with
respect to a Termination Event.


 


(f)                                    Credit Event Upon Merger.  The “Credit Event Upon Merger” provisions in
Section 5(b)(iv)


 

















 


are hereby amended by: (I) deleting in the fourth line
thereof the words “another entity” and replacing them with the words “or
reorganizes, incorporates, reincorporates, reconstitutes, or reforms into or as, or receives all
or substantially all of the assets and/or liabilities or obligations of,
another entity or X, such Credit Support Provider, or such Specified Entity, as
the case may be,”; (II) deleting in the fifth line thereof the words “the
resulting, surviving or transferee” and replacing them with the words “X, such
Credit Support Provider, or such Specified Entity, as the case may be, or any
resulting, surviving, transferee, reorganized, reconstituted or reformed”; and
(III) deleting in the seventh line thereof the words “its successor or
transferee” and replacing them with the words “any resulting, surviving,
transferee, reorganized, reconstituted or reformed entity”.


 


(g)                                 Automatic
Early Termination.  The “Automatic
Early Termination” provision of Section 6(a) will not apply.


 


(h)                                 Right to Terminate Following Termination
Event.  Sections
6(b)(ii)-(iv) are deleted in their entirety and replaced by the following:


 


“(ii)  Replacement on Termination Event.  Upon the occurrence of a Termination Event
(other than an Additional Termination Event) with respect to Party A, Party A
shall have the right within 20 days of the date of such Termination Event, at
its own expense, to arrange for one or more Replacement Above-Cap Liquidity
Providers to enter into and deliver to Party B a Replacement Above-Cap
Liquidity Facility for such Above-Cap Liquidity Facility. If Party A does not
arrange for such replacement and if the Above-Cap Liquidity Facility has not
otherwise been replaced by JetBlue Airways Corporation (at the expense of
JetBlue Airways Corporation) in accordance with the terms of Section 3.6(c)(ii)
of the Intercreditor Agreement, such 20th day (or if such 20th
day is not a Business Day, the next succeeding Business Day) shall be deemed to
be an “Early Termination Date” and Party A shall make a termination payment to
Party B in accordance with Part 1(j) of this Schedule.  For the avoidance of doubt, Party B shall
have no right to designate an Early Termination Date following the occurrence
of any Termination Event.


 


(i)                                    Calculations.
The “Payment Date”
provisions in Section 6(d)(ii) are deleted in their entirety and replaced by
the following:


 


“The Termination Amount
calculated as being due in respect of any Early Termination Date under Section
6(e) will be payable on such Early Termination Date.”


 


(j)                                    Payments on
Early Termination.  Section
6(e) is deleted in its entirety and replaced with the following:


 


“Upon the occurrence or designation of an Early
Termination Date with respect to the Transaction evidenced by the Confirmation,
Party A shall make a termination payment to Party B on the Early Termination
Date in an amount equal to the “Termination Amount” for the Early Termination
Date for credit to the Above-Cap Reserve Account (as provided in Section 3.6(f)
of the Intercreditor Agreement) to be applied as set forth in said Section
3.6(f) plus all Unpaid Amounts due and payable by Party A under the
Confirmation on or prior to the Early Termination Date and upon such payments
the Transaction evidenced by the Confirmation shall terminate.


 


2

















 


“Termination Amount” means, for any Early
Termination Date, the amount obtained by solving the following formula for TA:


 


TA =                  (20% per annum -
CR) x N x F


 


where


 


CR =                    the Cap Rate
designated in the Confirmation


 


N =                           the
Notional Amount for such date


 


F =
0.256


 


For the avoidance of doubt, the Termination Amount
shall not exceed US$3,809,402.88 at any time.”


 


(k)                                Termination
Currency.  “Termination Currency” means United States Dollars.


 


(l)                                    Additional
Termination Event.  Additional
Termination Event will apply solely as specified in the Confirmation.


 


(m)                              Limitations
on Conditions Precedent. 
Notwithstanding Section 2(a), the obligation of Party A to make
each payment specified in the Confirmation, so long as it shall remain in
effect, shall not be subject to any conditions precedent, and, without limiting
the foregoing, Party A agrees that it will make each such payment without
offset, counterclaim or defense.


 


 


Part 2


Tax
Representations


 


(a)                                  Payer
Tax Representations.  For the
purpose of Section 3(e), Party A and Party B each make the following representation:


 


It is not required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, of any Relevant
Jurisdiction to make any deduction or withholding for or on account of any Tax
from any payment (other than interest under Section 2(e) or 6(e)) to be made by
it to the other party under this Agreement. In making this representation, it
may rely on:


 


(i)                                     the
accuracy of any representation made by the other party pursuant to
Section 3(f);


 


(ii)                                  the
satisfaction of the agreement of the other party contained in Section 4(a)(i)
or 4(a)(iii) and the accuracy and effectiveness of any document provided by the
other party pursuant to Section 4(a)(i) or 4(a)(iii); and


 


(iii)                               the
satisfaction of the agreement of the other party contained in Section 4(d);


 


provided that it shall not be a breach of this
representation where reliance is placed on clause (ii), and the other party
does not deliver a form or document under Section 4(a)(iii) by reason of
material prejudice to its legal or commercial position.


 


(b)                                  Payee
Tax Representations. For the purpose of Section 3(f),


 


3

















 


(i)                                     Party
A represents that it is a corporation organized under the laws of the State of
Delaware.


 


(ii)                                  Party
B represents that it is a Delaware banking corporation.


 


 


Part 3


Agreement
to Deliver Documents


 


For the purpose of
Section 4(a)(ii) of this Agreement, each party agrees to deliver the following
documents, as applicable:


 


	
  Party
  required to

  deliver documents

  	
   

  	
  Form/Document/

  Certificate

  	
   

  	
  Date by which to be

  delivered

  	
   

  	
  Covered by

  Section 3(d)

  Representation

  
	
  Party A and
  Party B

  	
   

  	
  Evidence
  reasonably satisfactory to the other party as to the names, true signatures
  and authority of the officer or officials signing this Agreement or the
  Confirmation on its behalf

  	
   

  	
  Upon execution
  of this Agreement and the related Confirmation

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A

  	
   

  	
  A copy of the
  annual report for Party A containing audited and certified financial
  statements for the most recently ended financial year

  	
   

  	
  Upon request, as
  soon as publicly available

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A

  	
   

  	
  Opinions of
  counsel to Party A and its Credit Support Provider reasonably
  satisfactory in form and substance to Party B with respect to this
  Agreement and the Credit Support Document specified in Part 4(e)

  	
   

  	
  Upon execution
  of this Agreement

  	
   

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party B

  	
   

  	
  Certified copies
  of all documents evidencing the necessary corporate authorizations and
  approvals with respect to the execution, delivery, and performance of derivatives
  transactions

  	
   

  	
  Upon execution
  of this Agreement

  	
   

  	
  Yes

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A

  	
   

  	
  Correct,
  complete and executed U.S. Internal Revenue Form W-9 or any successor thereto

  	
   

  	
  Upon execution
  of this Agreement, upon the appointment of a successor Subordination Agent, and
  at any time upon reasonable request by Party B

  	
   

  	
  Not applicable

  



 


4

















 


	
  Party B

  	
   

  	
  Correct,
  complete and executed U.S. Internal Revenue Form W-9 or any successor thereto

  	
   

  	
  Upon execution
  of this Agreement, upon the appointment of a successor Subordination Agent,
  and at any time upon reasonable request by Party A

  	
   

  	
  Not applicable

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Party A

  	
   

  	
  Credit Support
  Document specified in Part 4(e)

  	
   

  	
  Upon execution
  of this Agreement

  	
   

  	
  Yes

  



 


Part 4


Miscellaneous


 


(a)                                  Addresses for Notices.  For the purpose of Section 12(a):


 


(i)                                     Address
for notices or communications to Party A (including all notices pursuant to
Sections 5, 6 and 7 as well as any changes to Party B’s address, telephone
number or facsimile number):


 


	
  Address:

  	
   

  	
  Morgan Stanley
  Capital Services Inc.

  
	
   

  	
   

  	
  Transaction
  Management Group

  
	
   

  	
   

  	
  1585 Broadway

  
	
   

  	
   

  	
  New York,
  NY  10036-8293

  
	
  Attention:

  	
   

  	
  Chief Legal
  Officer

  
	
  Facsimile:

  	
   

  	
  212-507-4622

  



 


(ii)                                  Address
for notices or communications to Party B:


 


	
  Address:

  	
   

  	
  Wilmington Trust
  Company

  
	
   

  	
   

  	
  Rodney Square
  North

  
	
   

  	
   

  	
  1100 North
  Market Street

  
	
   

  	
   

  	
  Wilmington,
  Delaware 19890-0001

  
	
  Attention:

  	
   

  	
  Corporate Trust
  Administration

  
	
  Telephone:

  	
   

  	
  302-651-1000

  
	
  Facsimile:

  	
   

  	
  302-636-4140

  



 


(b)                                  Offices.  The provisions of Section 10(a) will apply to this
Agreement.


 


(c)                                  Multibranch
Party.  For the purpose of Section
10(c):


 


Party A is not a Multibranch Party.


Party B is not a Multibranch Party.


 


(d)                                  Calculation
Agent.  The Calculation Agent is
Party A, provided that if Party B disagrees with respect to any calculation or
determination, Party A and Party B each will appoint an independent Reference
Market-maker, and such two Reference Market-makers jointly will appoint a third
Reference Market-maker. Such three Reference Market-makers jointly will make such
calculation or determination (acting as experts and not as arbitrators), whose
calculation or determination will


 


5

















 


be binding and conclusive absent manifest error.  In addition, if an Event of Default with
respect to Party A has occurred and is continuing, Party B may appoint one of
the following five entities as Calculation Agent: JP Morgan Chase, UBS AG, Bank
of America, N.A., Deutsche Bank AG or Citibank, N.A.


 


(e)                                  Credit Support Documents.  Party
A shall deliver an unconditional and irrevocable guarantee dated as of March
24, 2004 from Morgan Stanley with respect to Party A’s obligations under this
Transaction for the benefit of Party B and such guarantee shall be a Credit
Support Document with respect to Party A.


 


With respect to Party B: None.


 


(f)                                    Credit
Support Provider.


 


Credit Support Provider means in relation to Party A:
Morgan Stanley.


 


Credit Support Provider means in relation to Party B:
None.


 


(g)                                 Governing
Law.  This Agreement and each Confirmation
will be governed by and construed in accordance with the laws of the State of
New York.


 


(h)                                 Jurisdiction.  Section 13(b) is hereby amended by: (i)
deleting in the second line of subparagraph (i) thereof the word “non-”; and
(ii) deleting the final paragraph thereof.


 


(i)                                    Netting
of Payments. The Netting provision
set forth in Section 2(c) will not apply to any Transaction.


 


(j)                                    Affiliate.  Affiliate will have the meaning
specified in Section 14, provided
that the definition of Affiliate in relation to Party A does not include Morgan
Stanley Derivative Products, Inc.


 


(k)                                Covered Transaction.
The Transaction evidenced by the Confirmation dated the
date of this Agreement (Reference Number: KQAUS) will constitute the only
Transaction and Confirmation supplementing, forming part of, and subject to,
this Agreement.


 


Part 5


Other
Provisions


 


(a)                                  Definitions.  This Agreement and the Transaction between
the parties are subject to the 2000 ISDA Definitions and Annex to the 2000 ISDA
Definitions (June 2000 Version) as published by the International Swaps and
Derivatives Association, Inc. (collectively, the “Definitions”), and will be
governed in all relevant respects by the provisions set forth in the
Definitions, without regard to any amendment to the Definitions subsequent to
the date hereof. The provisions of the Definitions are incorporated by
reference in and shall be deemed a part of this Agreement, except that
references in the Definitions to a “Swap Transaction” shall be deemed
references to a “Transaction” for purposes of this Agreement. In the event of
any inconsistency between the provisions of this Agreement and the Definitions,
this Agreement will prevail. 
“Intercreditor Agreement” as used in this Agreement shall mean the
Intercreditor Agreement dated as of March 24, 2004 among Wilmington Trust
Company, as Trustee under the JetBlue Airways Pass Through Trust 2004–1G-1,
JetBlue Airways Pass Through Trust 2004–1G–2 and JetBlue Airways Pass Through
Trust 2004–1C, Landesbank Hessen-Thüringen Girozentrale, as Class G–1 Primary


 


6

















 


Liquidity Provider, Class G–2 Primary Liquidity
Provider and Class C Primary Liquidity Provider, Morgan Stanley Capital
Services Inc. as Class G–1 Above-Cap Liquidity Provider, Class G–2 Above-Cap
Liquidity Provider and Class C Above-Cap Liquidity Provider, MBIA Insurance
Corporation as Policy Provider and Wilmington Trust Company as Subordination
Agent, attached hereto as Exhibit A. 
Capitalized terms used and not defined herein, the Confirmation, or the
Definitions shall have the meanings set forth in the Intercreditor Agreement,
as amended or modified from time to time in accordance with the terms thereof.


 


(b)                                  Relationship
Between Parties.  Each party will be
deemed to represent to the other party on the date on which it enters into the
Transaction that (absent a written agreement between the parties that expressly
imposes affirmative obligations to the contrary for that Transaction):


 


(i)                                     Non-Reliance.  It is acting for its own account, and it has made its
own independent decisions to enter into the Transaction and as to whether the
Transaction is appropriate or proper for it based upon its own judgment and
upon advice from such advisers as it has deemed necessary.  It is not relying
on any communication (written or oral) of the other party as investment advice
or as a recommendation to enter into the Transaction; it being understood that
information and explanations related to the terms and conditions of the
Transaction shall not be considered investment advice or a recommendation to
enter into the Transaction.  No communication (written or oral) received
from the other party shall be deemed to be an assurance or guarantee as to the
expected results of the Transaction.


 


(ii)                                  Assessment and
Understanding.  It is capable of assessing the merits of and understanding
(on its own behalf or through independent professional advice), and understands
and accepts, the terms, conditions and risks of the Transaction.  It is
also capable of assuming, and assumes, the risks of the Transaction


 


(iii)                               Status of Parties.  The other party is not
acting as a fiduciary for or an adviser to it in respect of the Transaction.


 


(c)                                  WAIVER
OF JURY TRIAL.  EACH PARTY HEREBY
WAIVES ITS RESPECTIVE RIGHT TO JURY TRIAL WITH RESPECT TO ANY LITIGATION
ARISING UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR THE TRANSACTION.


 


(d)                                  Non-petition.  Party A agrees that it will not, prior to
the date that is one year and one day following the final payment of the Certificates,
acquiesce, petition or otherwise invoke or cause, or join in invoking or
causing, Party B or any other person or entity to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
(whether voluntary or involuntary) against Party B under any bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of Party B or
any substantial part of its property or ordering the winding-up or liquidation
of the affairs of Party B, provided,
however, that nothing herein shall restrict or prohibit Party A from
joining in any existing bankruptcy, reorganization, arrangement, insolvency,
moratorium or liquidation proceedings or other analogous proceedings under
applicable laws.


 


(e)                                  Waiver of Right of Set-off. Notwithstanding any provision of this
Agreement, the Confirmation or any other existing or future agreement between
the parties hereto, each party irrevocably waives any and all rights it may
have to set-off, net, recoup or otherwise withhold or suspend or condition
payment or performance of any obligation between the two parties hereunder
against any obligations between the two parties, whether arising under any
agreement, applicable law or otherwise.


 


7

















 


(f)                                    Amendments.  This Agreement is hereby further amended as
follows:


 


(1)                                  Section
2(b) is hereby amended by the insertion of the following at the end thereof
after the word “change”: “provided that if such new account shall not be in the
same jurisdiction having the same power to tax as the original account, the
party not changing its account shall not be obliged to pay any greater amounts
and shall not receive less as a result of such change than would have been the
case if such change had not taken place.”


 


(2)                                  Section
2(d) is amended by adding thereto a new final sentence reading as follows:
“Anything in this Section 2(d) to the contrary notwithstanding, Party B shall
not be obligated to make any payment under this Section 2(d) to Party A”.


 


(3)                                  Section
7 is amended by adding a new penultimate sentence to Section 7 as follows: “Any
purported transfer under this Section 7 shall require Ratings Confirmation”.


 


(4)                                  Section
9(b) is amended by adding thereto a new sentence reading as follows: “In
addition, no amendment, modification or waiver in respect of this Agreement
will be effective unless Ratings Confirmation is received.”


 


(g)                                 Limitation
of Liability.  The obligations of
Party B under this Agreement, and in respect of the Transaction evidenced by
the Confirmation, are expressly limited to the extent of funds, if any, made
available for such payment to Party B under, and in accordance with, the
priorities of payments set forth in Sections 3.2 and 3.6 of the Intercreditor
Agreement. No recourse under any obligation, covenant or agreement of Party B
contained in this Agreement or the Confirmation shall be had against any
incorporator, stockholder, agent, affiliate, officer, employee or trustee of
Party B, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise; it being expressly
agreed and understood that the agreements of Party B contained in this
Agreement or the Confirmation are solely trust obligations of Party B and that
no personal liability whatsoever shall attach to or be incurred by the
incorporators, stockholders, agents, affiliates, officers, employees or
trustees of Party B, as such, or any of them, under or by reason of any of the
obligations, covenants or agreements of Party B contained in this Agreement or
the Confirmation and that any and all personal liability of every such
incorporator, stockholder, agent, affiliate, officer, employee or trustee of
Party B for breaches by Party B of any such obligation, covenant or agreement,
which liability may arise either at common law or at equity, by statute or
constitution, or otherwise, is hereby expressly waived as a condition of and in
consideration for the execution of this Agreement; provided, however,
that nothing in this paragraph shall relieve any of the foregoing persons from
any liability which any such person may otherwise have for his/her or its gross
negligence or willful misconduct or, with respect to the handling or transfer
of funds, ordinary negligence.


 


(h)                                 Eligible Contract Participant.  Each
party represents to the other that it is an “eligible contract participant” as defined in
Section 1a(12) of the Commodity Exchange Act of 1922 (7 U.S. Code §1 et seq.) as amended (“CEA”). This
Agreement and the Transaction hereunder are subject to individual negotiation
by the parties. Neither this Agreement nor the Transaction hereunder has been
executed or traded on a “trading facility” as defined in Section 1a(33) of the
CEA.


 


(i)                                    Accuracy
of Specified Information.  Section 3(d) is
hereby amended by adding in the third line thereof after the word “respect” and
before the period the words “or, in the case of audited or unaudited financial
statements or balance sheets, a fair representation of the financial condition
of the relevant person.”


 


8

















 


[Signatures follow on separate page]


 


9

















 


IN WITNESS WHEREOF the parties have executed this
Schedule to the ISDA Master Agreement on the respective dates specified below
with effect from the date specified on the first page of this document.


 


 


	
   

  	
  MORGAN
  STANLEY CAPITAL SERVICES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nina C.
  Simmons

  
	
   

  	
  Name:

  	
  Nina C. Simmons

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
  Date:

  	
  March 24, 2004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WILMINGTON
  TRUST COMPANY

  
	
   

  	
  in its capacity
  as Subordination Agent on behalf of the Trustee under the Class C Trust
  Agreement.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathleen A.
  Pedelini

  
	
   

  	
  Name:

  	
  Kathleen A.
  Pedelini

  
	
   

  	
  Title:

  	
  Financial
  Services Officer

  
	
   

  	
  Date:

  	
  March 24, 2004

  



 


10

















 


Exhibit A


 


Intercreditor Agreement


 


11